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Insurers lobby to avoid paying out to cover airline losses

UNCERTAINTY over who will foot the losses generated by the flight restriction mounted yesterday as it remained unclear how insurance cover would be given to the airlines.

Airlines impacted by the closure of airspace could have cover, according to Holman Fenwick Willan lawyer Paul Wordley, but only if they have business interruption triggers in their policies that respond to non-physical damage scenerios.

He said: “Airlines and indeed any business impacted should be thinking about their exposure and whether or not they are insured against it. We’re telling clients to read their policies.”

The insurance industry is currently attempting to assess whether they have any exposure to this week’s events, which has seen airlines report up to £20m in daily revenue losses.

Lloyds of London said that it was too early to tell what type of insurance contracts the Icelandic volcano eruption might trigger but said they were currently assessing the exposure they may have. A spokesperson said: “If Lloyd’s does have coverage, it will be dealt with in the ordinary course of business.”

A raft of UK and European airlines are currently lobbying the government and the European Union to provide financial support as flights for the six-day grounding.

British Airways boss Willie Walsh argued that a precedent had been set by the events on September 11 when the US government paid out compensation to American commercial air liners after US airspace was shut for seven days.

According to UBS, airlines have been losing €140m (£123m) a day. The no-frills airline easyJet put its total losses at £40m, while British Airways revealed it was losing up to £20m a day, making total losses of about £100m.